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Choose the one alternative that best completes the statement

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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.;1) Speculative and growth oriented investments are least appropriate for;A) retired investors.;B) young investors.;C) high income investors.;D) middle-aged investors.;1);2) Short-term investments;I. provide liquidity.;II. fill an important part of most investment programs.;III. provide a high rate of return with low risk.;IV. provide resources for emergencies.;A) II and IV only;B) I, II, III and IV;C) I, II and IV only;D) I and IV only;2);3) Which one of the following has the lowest level of risk?;A) U.S. Treasury bill;B) banker's acceptance;C) money market mutual fund account;D) commercial paper;3);4) Which one of the following statements about the NYSE is correct?;A) Buy orders are filled at the lowest price and sell orders are filled at the highest price.;B) Any listed stock may be traded at any of 20 trading posts.;C) Brokerage firms are only permitted to have one individual trading on the floor of the;exchange.;D) Each member of the exchange owns a trading post.;4);5) A market where securities are bought from or sold to a market maker is known as a;A) exchange floor.;B) broker market.;C) dealer market.;D) board of exchange.;5);6) The price an individual investor will pay to purchase a stock in the OTC market is the;A) broker price.;B) bid price.;C) spread.;D) ask price.;6);7) American Depositary Receipts represent;A) receipts for dollar deposits in foreign banks.;B) receipts for the stocks of foreign companies held by banks in the companies' home;country.;C) receipts for shares of foreign companies held by U.S. broker-dealers.;D) receipts from foreign broker-dealers establishing ownership of foreign stocks.;7);8) Kayla invested $3,000 and purchased shares of a German corporation when the exchange rate;was $1.00 =.70 euro. After six months, she sold all of the shares for 3,180 euros, when the;exchange rate was $1.00 =.68 euro. No dividends were paid during the time Heidi owned the;shares of stock. What is the amount of Kayla's gain or loss on this investment?;A) $129.60 gain;B) $1676 loss;C) $1676 gain;D) $250 loss;8);1;9) Jessica purchased 200 shares of stock at $38 using her 70% margin account. Her maintenance;margin is 40%. Jessica has no other securities in her account. At what price will she receive a;margin call?;A) $11.40;B) $26.60;C) $7.60;D) $19.00;9);10) Which one of the following is a measure of the performance of small companies?;A) Russell 1000;B) Value Line 1700;C) Russell 3000;D) Russell 2000;10);11) An odd-lot trade involves a trade;A) of only 100 shares.;B) that is generally priced at a discount to the market price.;C) consisting of any number of shares that is not a multiple of 100.;D) of 100,000 shares or more.;11);12) McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares but only if she;can do so at $90 or less. She should place a(n);A) odd-lot order.;B) stop order.;C) limit order.;D) market order.;12);13) Ryan places a good-'til-canceled limit order to sell 300 shares of KM at $18 a share. When his;order reaches the trading floor, KM is trading at $18.20. Which of the following statements is;true concerning Roy's order?;A) The brokerage firm will sell the 300 shares at $18.20 and keep the additional $0.20 as a;commission.;B) The order will be executed at $18.20 with the proceeds credited to Roy's account.;C) The trade will not be executed and will be immediately cancelled.;D) The specialist will record the order in the order book and execute the trade as soon as the;price hits $18.00.;13);14) On October 12, Kevin placed a day order to purchase 100 shares of ABC stock at $21 a share.;During the day, the stock sold at prices ranging from $21.01 to $22.49. Over the following;month the stock sold in a range of $21.60 to $23.05. On December 2, the market declined;radically and the price of ABC stock dropped to $19.94. Which one of the following statements;is correct concerning Allen's order?;A) The order was executed at $19.94.;B) The order was never executed.;C) The order was executed at $22.49.;D) The order was executed at $21.01 per share.;14);15) Mike bought 200 shares of EG stock two years ago at $16 per share. The stock has traded in a;range of $21 to $44 a share over the past year. EG is now selling for $43.60 a share. EG;announces its earnings today and Mike feels the stock could go to $60 on good news or fall to;$30 on bad. To protect his profits, the most appropriate order for him to place is;A) market order to sell immediately.;B) a stop loss order at $42.;C) a limit sell order at $60.00.;D) a stop-limit order to sell at $45.;15);2;16) Rob owns 300 shares of Blackwood common stock valued at $9 a share. Blackwood has;declared a 3-for-1 stock split effective tomorrow. After the split, Rob will own;A) 900 shares valued at about $3 a share.;B) 900 shares valued at about $27 a share.;C) 100 shares valued at about $27 a share.;D) 100 shares valued at about $3 a share.;16);17) One motive for issuing classified stock with different voting rights is to;A) increase the market value of the company.;B) facilitate the issue of additional shares in the future.;C) avoid SEC reporting requirements.;D) allow the company's founders to retain control of the company.;17);18) The Limberger Corporation declared a quarterly dividend of $0.10 per share. The ex-dividend;date was July 15, the date of record was July 18, and the payment date was July 28. If you had;owned 100 shares of the Limberger Corporation and sold them on July 15, then;A) you would collect $5.00 in dividends, and the purchaser would collect $5.00 in dividends.;B) the purchaser would collect $10.00 in dividends, and you would not collect any;dividends.;C) you would collect $10.00 in dividends, and the purchaser would not collect any;dividends.;D) neither you nor the purchaser would collect any money in dividends.;18);19) Dividend yield is calculated by dividing;A) the annual dividend per share by the market price of one share of stock.;B) annual dividend per share by earnings per share.;C) earnings per share by market price per share.;D) the market price of one share of stock by the annual dividend per share.;19);20) Companies with strong earnings but limited growth opportunities;A) do not generally pay any dividends.;B) are speculative stocks.;C) are called blue-chip stocks.;D) generally pay high dividends.;20);21) Which of the following are advantages of the buy and hold strategy?;I. rapid accumulation of wealth;II. low transaction costs;III. capital gains taxed at the long-term rate;IV. Portfolio requires less time and energy to manage than for most other strategies.;A) I, II, III and IV;B) II, III and IV only;C) I and II only;D) II and III only;21);22) The intrinsic value of a security is based on the;I. amount of risk.;II. current market value of the security.;III. discount rate applicable to the security.;IV. estimated future cash flows from the security.;A) I, II and III only;C) III and IV only;22);3;B) I, III and IV only;D) I and III only;23) Rising interest rates tend to;A) increase the level of business investment.;B) signal the trough of a recessionary market.;C) indicate governmental expansion of the economy.;D) contract the level of economic activity.;23);24) Which of the following businesses will be positively impacted by a weak dollar?;A) exports;B) personal services;C) imports;D) retailing;24);25) Which of the following tend to signal that stock prices are likely to rise in the future?;I. Employment increases after several months of recession.;II. Interest rates are low compared to the recent past.;III. Major market indexes have just reached record highs.;IV. Housing starts increase after several months of decline.;A) II and III only;B) I and II only;C) I, II and IV only;D) I, II, III and IV;25);26) The inventory turnover rate for a firm is 14.5 as compared to the relevant industry rate of 13.2.;In this case, the firm is;A) generating less sales per dollar of inventory.;B) averaging less days of sales in inventory than the industry.;C) selling its inventory slower than the industry.;D) underperforming the industry.;26);27) A lending institution would prefer that a firm have a ________ debt-equity ratio and a;times interest earned ratio.;A) higher, lower;B) higher, higher;C) lower, higher;D) lower, lower;27);28) Quick Cement has a return on assets of 8%. If it has $1.5 million in total assets and a total asset;turnover of 2, it follows that the firm must have a net profit margin of;A) 6%.;B) 4%.;C) 8%.;D) 12%.;28);29) The PEG ratio;A) compares the price/earnings ratio to the rate of growth of the company's earnings.;B) preferred by investors is equal to 2.0 or higher.;C) is a measure of a firm's liquidity.;D) measures the ability of a firm's assets to generate growth for the firm.;29);30) Under normal economic conditions, the major source of risk faced by investors who purchase;investment grade bonds is;A) default risk.;B) purchasing power risk.;C) interest rate risk.;D) liquidity risk.;30);31) Bonds with one of the top four ratings (Aaa through Baa, or AAA through BBB) are designated;as;A) high-yield bonds.;B) split bonds.;C) illiquid bonds.;D) investment grade bonds.;31);4;32) Solstice Corporation issued a 5% bond four years ago at par value. The market interest rate on;comparable bonds today is 4%.;A) This bond sells at a premium and the coupon rate is lower than the yield.;B) This bond sells at a premium and the coupon rate is higher than the yield.;C) This bond sells at a discount and the coupon rate is higher than the yield.;D) This bond sells at a discount and the coupon rate is lower than the yield.;32);33) An increase in the market rate of return on an outstanding bond will;A) increase the bond price.;B) increase the coupon rate.;C) decrease the coupon rate.;D) decrease the bond price.;33);34) Which of the following statements is(are) correct concerning exchange-traded funds (ETFs)?;I. You can buy and sell ETFs any time during trading hours.;II. ETFs are actively managed.;III. ETFs have high portfolio turnover rates.;IV. ETFs rarely distribute any capital gains.;A) I, II and IV only;B) I and IV only;C) I, III and IV only;D) II and III only;34);35) One characteristic of 12(b)-1 charges is that they are payable;A) each year regardless of the performance of the mutual fund.;B) only when shares in the fund are sold.;C) only during the first year the fund is owned.;D) only in years that the mutual fund shows an increase in net asset value.;35);36) A type of fund that invests in real estate and/or mortgages is known as a;A) ETF.;B) hedge fund.;C) REIT.;36);37) Which type of fund is always passively managed?;A) a growth fund;C) an index fund;D) sector fund.;37);B) a closed-end fund;D) a value fund;38);38) Value funds seek stocks;I. with low dividend yields.;II. with potential for growth.;III. with low P/E ratios.;IV. of newly discovered firms.;A) I and III only;C) II, III and IV only;B) I, II, III and IV;D) II and III only;39) Which type of mutual fund consists of both stocks and bonds with a combined objective of;current income and long-term capital gains?;A) equity-income;B) value;C) bond;D) balanced;39);40) A mutual fund is generally more tax efficient when it has a ________ turnover rate and a;dividend yield.;A) high, low;B) low, low;C) high, high;D) low, high;40);Questions below relate to lecture materials;5;41) Which of the following may be considered illegal insider trading?;A);B);C);D);41);you traded on tips from your broker;you traded on tips from your spouse who worked for a brokerage;you traded on tips from online message boards open to the public;you traded on news you overheard in a restaurant between 2 investment bankers;working on a merger case that is not yet known to the public;42) You sold short ABC Inc. stock at $50 a share. The initial margin requirement is 50% and the;maintenance margin requirement is 30%. At what price will the stock have to be at in order;for you to be at the maintenance margin?;A) $57.69;B) $166.67;C) $35.71;D) 83.33;42);43) You sold short 100 shares of XYZ stock at $56 a share, with the initial margin at 40%. Six months;later your shares were recalled by the broker and you had to purchase the shares back at $58.50;a share. During this time XYZ had declared and paid $2 a share in dividends. What would be;your return on investment?;A) 11%;B) -2%;C) -11%;D) -20%;43);44) At times of rising inflation, which of the following factors could make a firm's reported;earnings over-stated relative to true economic earnings?;A) Using LIFO for inventory valuation;B) Depreciation charges if firm has large layers of fixed assets;C) Interest payments due to rising cost of borrowing;D) None of the above;44);45) (Extra article question) Exchange-Traded Funds (ETFs) do NOT have the following restrictions;except which one?;A) Shares are bought/sold at end-of-day NAV;B) Minimum investment required;C) Dividends are not automatically reinvested;D) Taxable capital gains distributed even when the fund dropped in price;E) None of the above;45);46) (Extra article question) Which of the following is NOT considered something investors should;pay careful attention to when evaluating whether a disconcerting market event is systemic;(i.e., having a lasting, system-wide impact on the economy and the markets) in nature?;A) Is there excessive leverage in the system;B) Is the economic fundamentals strong;C) Is geopolitical event isolated incidents;D) Is the govt. running up the deficit;46);47) According to Morningstar.com, which of the following is NOT true regarding the T. Rowe;Price Media and Telecommication fund (PRMTX)?;A) Its return performance exceeded the category average in each of the prior 5 years;B) Consumer cyclicals is not its largest sector holdings;C) It turns over its portfolio about 2 times a year;D) It mainly invests in growth stocks with small to medium market cap;47);6;48) Which of the following represents a sell signal for technical traders?;A) The 50-day moving average has pierced through to rise above the 200-day moving;average price;B) The P/E ratio is trailing the average for the industry;C) The CAPM required rate of return exceeded the expected return based on security;analysts consensus;D) The ratio of advancing to declining issues is 1.6 and the ratio of advancing issue volume;to declining issue volume is 1.4;48);49) McDonalds (ticker: MCD) has a stock beta of 0.45, and the stock currently trades at $94 a;share. If the stock has a forward dividend yield of 3% and the current analysts median price;target is $98, and assuming a Market Risk Premium (MRP) of 7% and a 10-year T-bond yield of;2.7% (the risk-free rate), the stock is ______________ according to the Capital Asset Pricing;Model (CAPM).;A) Undervalued (should be bought);B) Overvalued (should be sold);C) A little overvalued but not enough to be of any concern;D) Fairly valued;49);50) Which of the following statements is NOT true with respect to Technical Analysis?;A) Supply and demand factors determine price movements in stock markets;B) The market is efficient and at equilibrium at all times;C) Support and resistance levels of stock prices can help identify trading opportunities;D) Stock prices adjust slowly to fundamental values;50);7;8;View Full Attachment;Additional Requirements;Min Pages: 1;Max Pages: 7;Level of Detail: Show all work

 

Paper#30167 | Written in 18-Jul-2015

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